Twenty months after the company first brought forth its vision of Web-driven applications, Microsoft announced this morning a re-targeting of its Office Live approach, spinning off "Office Live Workspace" as a free service centered around individuals who already use Microsoft Office.

The new service opens up storage space for as many as "1,000+ documents" (the exact specifications have never been released) to users of the conventional Office suite. Meanwhile, the existing Office Live services become rebranded as "Office Live Small Business," with some upgrades to its options. Free users of the Basics tier will now have access to 500 MB of online storage, while $19.95 per month buys users a second half-gigabyte and professional Web site generation capabilities.

In a prepared Q&A this morning, Microsoft Business Division President Jeff Raikes explained how his company is trying to parcel out the "cloud" - the invisible storage region where Microsoft hosts storage and services - for new clients who perhaps haven't taken advantage of it yet.

"We believe that the future of technology at work will be a combination of local software on client PCs or on-premise servers, along with services available in the 'cloud,"' Raikes stated. "Our approach is to give customers the choice, flexibility and power of both software plus services. Think of it as a continuum, ranging from pure software to pure services approaches. Most customers will be somewhere in the middle. Different customers will make different decisions and even customers with similar situations will make different decisions for what they want on-premise and what they want as a service from the cloud."

So for conventional office users, there's a smaller cloud for storage and extra services. Meanwhile on the other end of the sky, there's enterprise customers who the Microsoft hopes will take advantage of more of the cloud - the "continuum" to which Raikes refers.

For those venturing into the continuum, Microsoft is planning another tier of Web services outside of the "Live" umbrella and into another brand entirely. For now, it's being called "Online," and it's extending to services based on products it already offers to enterprises as server software, though in the form of professional hosting.

For instance, Exchange Online will apparently provide e-mail hosting services for businesses based on the Exchange format supported by Outlook and other enterprise e-mail apps. SharePoint Online and Communications Online will provide hosting services for document sharing and everyday communications, as the company has already promised.

Although details on these two new services remain sparse, Raikes painted at least a partly cloudy picture of their new product tier.

"For the past two years, Microsoft Managed Solutions (MMS) has been piloting a program targeted to a select group of customers," he stated this morning. "Today, MMS officially falls under 'Online' services and is available for customers with 5,000 seats or more. Online service offerings from Microsoft are for organizations with more advanced IT needs where power and flexibility are critical. These services will give businesses the ability to control access to data, manage users, apply business and compliance policy, and meet high availability standards while providing performance, scalability, security, management features and service-level capabilities to support mission-critical applications and systems."

If you're keeping score at home, there's one more services tier to add to your list: It's called "Labs," and Microsoft plans to attach it to a version of Exchange services for testing with select customers. For now, the company says, it plans to select colleges and universities, as well as other product groups whose lives and livelihood may yet be touched by the benefits of the cloud.